Deliveroo is to cut 350 roles amid a fall in online orders as cash-strapped consumers rein in spending.
The boss of the online delivery firm, which weathered a disastrous £7.6bn float on the London Stock Exchange two years ago that was nicknamed “flopperoo”, admitted that the downsize comes after being caught up in a hiring spree in a fight for growth and market share against competitors.
“In recent years we grew our headcount very quickly,” said the chief executive, Will Shu, who co-founded the company a decade ago. “This was a response to unprecedented growth rates supported by Covid-related tail winds. I should have had a more balanced approach to headcount growth.”
The company, whose market value has falled more than 40% in the past year, said the 350 roles put at risk equate to about 9% of its staff. The company said it hoped to limit the actual number of redundancies, most of which will be from its UK operation, to about 300 by redeploying some affected staff to new roles.
In January, the company said cost-cutting had helped it to boost profitability despite a 2% fall in order numbers across the group in the final quarter of the year. In the UK and Ireland, order numbers remained flat at 40.6m, of a total of 75.1m in the final quarter.
Last year, Deliveroo exited Australia and the Netherlands.
“The world we operate in has changed,” said Shu. “We now face serious and unforeseen economic headwinds. We have also recently exited markets, meaning we do not require the same size workforce to support our operations. Quite bluntly, our fixed cost base is too big for our business.”
Shu highlighted concerns including inflation running at a 40-year high, rising interest rates, soaring energy costs and “fears of a recession in the UK” for the need to reshape the business and sharpen the focus on profitability.
Deliveroo is the latest tech-focused business to reveal cuts following companies including the Facebook-owner Meta, Google, Microsoft, Snapchat and Twitter.
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“Companies such as ours must now also demonstrate and accelerate a clear path to profits,” said Shu. “This is on me, and I will not be making the same mistakes going forward. Our industry remains young and there is a huge market opportunity ahead.”
